(Bloomberg) -- The US Customs said Sime Darby Plantation Bhd., the world's largest oil palm grower, was found to no longer be using forced labor, clearing a path for the country to lift its ban on products from the Malaysian company.
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Palm oil and related products linked to Sime Darby were banned from entering the US since January 2022 on findings of forced labor. Since then, the company has provided additional information, and the US Customs and Border Protection said Thursday it has satisfactory evidence to believe that the products are "no longer mined, produced, or manufactured in any part with forced labor."
The CBP nod and a potential lifting of the yearlong ban could give some reprieve to Malaysia's palm oil and rubber-glove industries that have faced intense scrutiny in recent years over allegations of migrant worker abuse.
While the US is not a major customer for the company, the ban was a risk to its reputation and damped investor sentiment. It spurred Cargill Inc., one of the world's top agricultural traders, to stop purchasing products from Sime Darby. There's also concern other buyers, especially in Europe, would follow suit.
The CBP statement drove a slump in US prices of soybean oil, palm's closest substitute, on expectations of stiffer competition between the two edible oils. Benchmark palm oil futures climbed more than 1% in Kuala Lumpur, while shares in Sime Darby held gains to trade near a one-month high.
"We are optimistic that the tremendous strides we have made in bolstering the quality of life for our workforce will soon be recognized by the US Customs and Border Protection and that we will be allowed to resume exports to the US," Sime Darby said in response to questions from Bloomberg News.
The planter pledged to ensure the well-being of workers. It submitted a report in April to show that its operations are in "full compliance" with US import regulations and international labor standards. The Malaysian government also formed a working committee with the CBP to address the issue.
(Updates with price moves in fifth paragraph, adds details throughout)
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